LPs largely satisfied with GP transparency and becoming more active in secondaries market
The vast majority of private equity Limited Partners are satisfied with the level of information they are receiving from fund managers on the state of their portfolio investments, according to the Brackendale LP Private Equity Sentiment Survey 2020.
Some 92 per cent of LP respondents claim they are seeing proactive engagement, regular and thorough updates, analysis and action plans from most GPs on the impact of COVID on existing portfolios, with additional information often being provided via "COVID-calls”.
A more mixed review was given by the remaining 8 per cent of LPs, who claimed some GPs are not communicating enough, or at all, given the current situation. One alluded to a “bell curve of transparency and communicativeness, with the best GPs setting a high bar, making the laggards look weak in comparison.”
According to the survey, some 71 per cent of LPs say they will become more active in the secondaries market as a direct result of COVID, while as many as 62 per cent of LPs surveyed are willing to make commitments to new funds even if they are not able to visit them, with the remaining 38 per cent purely focusing on re-ups.
In addition, 60 per cent of LP respondents see the value in fund manager pitches via video conferencing, compared to 36 per cent that answered they ‘maybe’ see the value, and a mere 4 per cent see no value, while Some 32 per cent of LPs have been forced to place fund commitments on hold because of the current pandemic.
Twelve per cent of LPs surveyed are changing investment strategy and turning to new market segments such as special situations, turnaround, Private Debt, Distressed, dislocated credit and moving away from sectors like consumer and energy, as a direct result of the pandemic.
Unsurprisingly, 92 per cent say LP distributions had been negatively impacted by the pandemic.
LPs surveyed hail from across Europe and the US, and comprise a mix of pension funds, insurance companies, family offices and fund-of-funds.
Fay Margo, Founding CEO, Brackendale, says: “Given the market turbulence and unprecedented times, we thought it an opportune moment to launch our first ever LP sentiment survey. It is heartening to discover how well GPs are responding to the current crisis, and that LPs are open to new ways of being pitched to, and even to commit without having to meet the fund managers in person.”